Bitcoin Bits: 16 May, 2016

A roundup of interesting articles about bitcoin and the blockchain that I stumbled across during the week.

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The Dao

The big subject of the week was the runaway success of The DAO crowdfunding sale. Launched at the end of April, it has surged ahead to raise $150m, which makes it not only the largest crowdfunding project in history, but also the most funded cryptocurrency project, ever.

So many insightful pieces have been written about this phenomenon over the past few days, that I’m not going to parse and extract here. I will, however, leave you with links to some of the ones that I found most interesting. These links should give some idea of the controversy this new development is generating. The concept is interesting, definitely. But I don’t believe that it is going to revolutionize how companies are set up, and I don’t believe that it will have the fundamental change on the way that we do business that some enthusiasts are claiming.

2016 was supposed to be the year of the blockchain. And yet, not even half way into it, already the clouds are gathering. Some notable blockchain platforms and service providers are toning down their business models. And in spite of months if not years of testing, there has yet to be a successful (by which I mean implementable) blockchain trial in “traditional” sectors such as finance and trade.

“The spinning of the tires on such attempts perhaps hasn’t been audible given that, while bitcoin’s problems were and still are largely public, the institutions experimenting with blockchain have done their best not publicize those struggles.

Still, there has been a noticeable change in tone among those working close to such efforts.”

Meanwhile, the media seems to be giving bitcoin a break and overlooking its governance issues and scaling bottleneck. Perhaps this is because the media has moved on to the blockchain hype.

“…months of infighting among network developers seems to have done little to cause bitcoin’s price to decline or its rate of new wallet or ATM growth to decrease. Further, Bitcoin Core, its main development group, seems more coordinated than ever, even if they’re operating more as the kind of unified entity they perhaps sought to avoid.”

So if we are emerging from bitcoin’s “trough of disillusionment” (so soon?) and while blockchain hype has crested its peak and is heading into the trough, can the two concepts achieve some sort of equilibrium?

“Rather than seen as a replacement for public blockchains, there’s a broader recognition that such technologies are best compared to “the Internet”, while permissioned efforts should be considered “Intranets”.”

Can technology really “solve” problems? Are the changes that it brings about “solutions” or “evolutions”? In the early ‘90s, the Internet was hailed as a replacement for cable television. Can Netflix really be called a “solution” to quality viewing?

“Rather, it simply altered the reality and the experience, providing some benefits along with some new hassles. It’s hard to imagine bitcoin and blockchain won’t deliver similar results.”

Could this be the beginning of the era of sidechains? It’s clear that bitcoin has a scalability problem, and that micro-transactions are not yet practical on the network. Sidechains look like an interesting solution, while at the same time opening up new technological possibilities.

On how the tone of the blockchain evangelists has become more entrepreneurial…

“As was the common rhetoric in the earlier days of bitcoin, blockchains open the potential for the disintermediation of not only these established businesses, but entire industries. Since this message seemed to shut more corporate doors than it opened, the “blockchain industry” slowly but noticeably adjusted its messaging to take a less hostile tone; where corporations were no longer necessarily the targets of the coming disruption, but instead, the forward-thinking ones could become the vessels of change.”